FTSE/JSE Responsible Investment Index: winners and losers
12 October 2015
The JSE on 12 October announced that it had launched two new indices:
- the FTSE/JSE Responsible Investment Index
- the FTSE/JSE Responsible Investment Top 30 Index
This follows a previous announcement in June 2015 that the JSE was replacing its SRI Index research provider EIRIS with FTSE Russell.
The new FTSE/JSE Responsible Investment Index differs from earlier version in a number of ways:
- There are 61 constituents [pdf] from 85 companies assessed. The eligible universe is companies that are constituents of the FTSE/JSE Shareholder Weighted All Share Index AND the FTSE All World Index. The constituents have a minimum FTSE ESG Rating of 2.0. By comparison, in 2014 there were 82 constituents with all 156 members of the FTSE/JSE All Share Index assessed.
- “Best performers” has been replaced with a Top 30 Index [pdf].
- There are seven new entrants, including Compagnie Financiere Richemont which is also a Top 30 constituent.
- There are 28 companies that were constituents of the 2014 SRI Index, but which do not appear in the FTSE/JSE Responsible Investment Index. Of these, 12 (in red below) were part of the eligible universe but were excluded presumably because they have a FTSE ESG rating below 2.0. These include ArcelorMittal, Harmony Gold and Oceana Group.
There is likely to be further debate over these changes at the 5th Annual Africa ESG conference, which Kigoda Consulting will be attending on 13 and 14 October.
While the change in methodology has provided some interesting winners and losers, it is important to remember that there are also several ESG laggards that have yet to appear on either the FTSE/JSE Responsible Investment Index or the earlier version. These include Shoprite, AVI and Pioneer.
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